> The MBAs running US manufacturers need to scrap their JIT strategies, build some warehouses, and start keeping a store of the essentials.
Just the other day here on HN I read an account from a founder who did just that- in early 2008. He ended up having a warehouse full of raw materials and no cash to make payroll. That's one way a business dies.
So, this talking point sounds good, those damn MBAs and their JITs!, but carries its own set of risks. It's important for each business to balance those risks and arrive at their own decision. It's not as cut-and-dry as one would necessarily think.
A few months into the pandemic. a Texas manufacturer of N95 masks offered to ramp up capacity and start cranking out millions of N95 masks so long as hospitals and the government were willing to sign a multiyear contract to continue to buy masks from him at pre-pandemic prices after the pandemic ended. No one took him up on his offer. He said without a long term contract there would eventually be a supply glut and all of the buyers would just go right back to the offshore suppliers who would undercut him by a few cents per mask. At the time, I thought he was crazy, but it looks like he was exactly right.
This is exactly where the government should operate with emergency stockpiles.
Buy stuff and sit on it for half it's shelf life, and when it's done sell it at just a little bit under fair market cost.
E.G. Buy N95 masks with a 5 year shelf life, hold them for 2, and rotate it out of the warehouse so the warehouse always has newer stuff and places that use it like construction and hospitals have a price stabilized source.
Just the other day here on HN I read an account from a founder who did just that- in early 2008. He ended up having a warehouse full of raw materials and no cash to make payroll. That's one way a business dies.
So, this talking point sounds good, those damn MBAs and their JITs!, but carries its own set of risks. It's important for each business to balance those risks and arrive at their own decision. It's not as cut-and-dry as one would necessarily think.